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Smart Summary

Factual and Procedural Background

This case concerns two registered sale deeds executed by the same person, Phulchand, in respect of the same property: one dated 23rd December 1938 in favor of the plaintiff, and the other dated 20th February 1939 in favor of defendant No. 1. The central question was whether title passed to the plaintiff under the first sale deed despite the entire consideration not being paid. Phulchand had executed a deed of agreement on the same day as the first sale deed admitting partial receipt of consideration and promising to present the sale deed for registration. The first sale deed was registered on 6th January 1939. Subsequently, Phulchand executed a second sale deed and a deed cancelling the first sale deed in February 1939. The plaintiff filed suit for declaration of title and recovery of possession. The lower courts decreed in favor of the plaintiff, holding that title had passed under the first sale deed. The defendants appealed, and the decree was affirmed. The defendants then preferred a second appeal.

Legal Issues Presented

  1. Whether title to the property passed to the plaintiff under the first sale deed dated 23rd December 1938 despite the entire consideration not being paid at the time of execution and registration.
  2. The legal effect of partial payment of consideration and the parties' intention as expressed in the sale deed and related documents on the passing of title.

Arguments of the Parties

Appellants' Arguments

  • The appellants contended that the terms of the plaintiff's sale deed indicated that title would pass only upon payment of the entire consideration.
  • They relied on precedents holding that where the balance of consideration remains unpaid, title does not pass.
  • They emphasized the recital in the sale deed suggesting contemporaneity of payment and transfer of title.
  • They also relied on a notice sent by Phulchand to the plaintiff demanding payment of the balance consideration and warning cancellation of the sale deed.

Respondent's Arguments

  • The plaintiff-respondent relied on authorities holding that a registered sale deed passes title unless it is clearly intended otherwise.
  • He argued that the language of the sale deed and the deed of agreement executed the same day evidenced intention that title passed upon execution and registration.
  • He contended that partial payment and the vendor's undertaking not to transfer the property to others supported the passing of title.
  • The plaintiff's reply to the notice clarified readiness to pay the balance upon delivery of possession, which did not negate the passing of title.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
1 Cut. L.T 1 Title passes only on payment of entire consideration when deed recitals indicate contemporaneous transfer and payment. Distinguished on facts; court held that the language of the sale deed in the present case showed intention to pass title despite partial payment.
59 I.C 171 Registration alone does not pass title if no possession is delivered and no consideration passes. Considered but found facts differed; here partial possession and agreement existed supporting title passing.
A.I.R 1934 Pat. 68 If title is intended not to pass until full payment, registration alone is insufficient. Court found the deed and agreement indicated intention to pass title on execution and registration.
A.I.R 1935 Pat. 45 Generally, parties do not intend title to pass without receiving consideration; intention must be gathered from deed terms. Applied principle but held that in this case the deed’s language showed intention to pass title despite partial payment.
A.I.R 1929 Pat. 550 A registered sale deed passes title unless parties intend otherwise. Relied upon by respondent to support passing of title on registration despite partial payment.
1 Cut. L.T 12 Section 92 of Evidence Act does not bar showing that consideration was agreed to be paid differently than recited. Accepted by court to consider surrounding circumstances and conduct to ascertain parties’ intention.
10 Pat. 264 Title passes on execution of sale deed even if purchase money is unpaid, unless agreement specifies otherwise. Applied to hold title passed on execution here.
17 Pat. 318 Ordinarily title passes on registration unless parties agree otherwise; subsequent conduct may clarify intention. Cited to affirm that intention to pass title on registration was clear in this case.

Court's Reasoning and Analysis

The court analyzed the language of the sale deed dated 23rd December 1938, noting clear recitals that the vendor transferred all rights and interest in the property to the plaintiff "from this day forward" and that neither he nor his heirs could claim any future interest. The court rejected the contention that title was contingent on full payment of consideration, emphasizing the earlier recital's clarity over the later ambiguous recital regarding receipt of full payment. The deed of agreement executed on the same day, admitting partial payment and undertaking not to sell to others, reinforced the intention to pass title upon execution and registration.

The court also considered the notice from the vendor demanding payment and cancellation but found the plaintiff's reply satisfactory and the notices insufficient to show that title was intended to be withheld until full payment. The court applied established principles from precedent that the intention of the parties, as gathered from the deed and surrounding circumstances, governs the passing of title. Registration, possession, and conduct of parties were all consistent with title passing under the first sale deed.

Therefore, the court affirmed the findings of the lower courts that title passed to the plaintiff under the first sale deed despite partial payment of consideration.

Holding and Implications

DISMISSED WITH COSTS

The court upheld the lower courts' decrees declaring that title passed to the plaintiff under the sale deed dated 23rd December 1938 notwithstanding that the entire consideration was not paid at the time of execution and registration. The decision directly affects the parties by confirming the plaintiff's title and right to possession. No new precedent was set; the ruling applied established principles concerning the intention of parties in sale deeds and the effect of partial payment of consideration on passing of title.

    Pirtam Singh And Others v. Jagannath Sarawgi And Others

    Chatterji, J.:— This is a case of competition between two registered sale deeds executed by the same person, one on 23rd December 1938, and the other on 20th February 1939, and the question for consideration is whether title passed under the first deed, though the entire consideration was not paid. Both the Courts below have concurrently held that title did pass.

    2. The vendor in both the sale deeds was Phulchand, deceased husband of defendant No. 2. He executed the first sale deed for a consideration of Rs. 1,000 in favour of the plaintiff. On 23rd December 1938, after completing the writing and execution of this deed, there was no time to present it for registration. Later, on the same day, Phulchand executed a deed of agreement in favour of the plaintiff in which he admitted to have received Rs. 216 out of the consideration; and he undertook to present the sale deed for registration on 3rd January 1939 on the reopening of the office after the Christmas holidays and not to transfer the property to anybody else. He presented the sale deed for registration on 6th January 1939 on which date it was registered. In the meantime, he received Rs. 58-8-0 more out of the consideration. But on 13th January 1939 he sent a notice to the plaintiff making certain allegations which the plaintiff refuted. On 20th February 1939 Phulchand executed, another sale deed in respect of the same property in favour of defendant No. 1. On the same day he also executed a deed cancelling the first sale deed dated 23rd December 1938. Subsequently defendant No. 1 transferred the property to defendants 3 to 7 by three sale deeds dated 20th February 1940.

    3. The plaintiff brought the present suit on 12th June 1940 asking for declaration of his title under the sale deed dated 23rd December 1938 and for recovery of possession. In the plaint it was alleged that the plaintiff offered to pay the balance of the consideration money to Phulchand when possession of the property would be delivered to him. The suit was contested by defendants 1 and 3 to 7 on various grounds out of which the only one which is material to this appeal was that the plaintiff did not acquire any title under the sale deed.

    4. The learned Munsif held that the plain, tiff acquired title to the disputed property under the sale deed. He also overruled the other defences. Accordingly, he decreed the suit with a direction that the plaintiff was at liberty to deposit in Court to the credit of defendant No. 2 the sum of Rs. 725-8-0, being the balance of the consideration money.

    5. On appeal by defendants 1 and 3 to 7, the decree was affirmed by the learned Additional Subordinate Judge. Defendants 1, 3 and 6 have preferred this second appeal.

    6. Mr. S.N Bose on behalf of the appellants contended that having regard to the terms of the plaintiff's sale deed Ext. 3 dated 23rd December 1938, it must be held that the intention of the parties was that the title would pass on the payment of the entire consideration. He relied on the decisions of this Court in 1 Cut. L.T 1,1 59 I.C 171,2 A.I.R 1934 Pat. 683 and A.I.R 1935 Pat. 45.4

    7. In the first case 1 Cut. L.T 1 which was decided by Courtney-Terrell, C.J and James, J. it was held that the terms of a contract reduced into writing must be sought from a consideration of writing itself. The sale deed with which their Lordships had to deal was for a consideration of Rs. 1,000 out of which Rs. 100 had already been paid and the deed recited “after taking from you the balance of Rs. 900, we make you owner in possession thereof and ourselves become from today destitute of ownership thereof.” Their Lordships construed this recital to imply that the transfer of title and the payment of Rs. 900 were contemporaneous. It was accordingly held that as the plaintiffs did not pay the balance of the consideratoin, they did not acquire any title under the sale deed.

    8. In the second case 59 I.C 171 which was decided by Jwala Prasad, J. sitting alone, it was held that where neither the deed of sale nor possession of the property sold is delivered to the vendee and no consideration passes, the mere registration of the deed of sale does not operate to pass the title to the vendee.

    9. In the next case A.I.R 1934 Pat. 68 which was decided by Agarwala, J. sitting alone, his Lordship held

    “If it was intended that title should not pass until payment of the consideration money registration alone was insufficient to pass the title. It has been found that the consideration money was not paid and it is not disputed that the vendor did not deliver to the plaintiff the deed of sale. In these circumstances the conclusion is irresistible that it was not intended that title should pass at the date of the registration.”

    10. In the last case A.I.R 1935 Pat. 45 which was decided by Varma, J. sitting alone his Lordship said

    “In cases of sale, it is very seldom the intention of parties to allow title to pass without receiving the consideration. To gather the intention of the parties one has only to refer to the kobala itself where the terms and conditions are mentioned.”

    11. Mr. B.C De, on the other hand, on behalf of the plaintiff-respondent relied on the decisions of this Court in A.I.R 1929 Pat. 550,5 1 Cut L.T 12,6 10 Pat. 2647 and 17 Pat. 318.8 In the case in A.I.R 1929 Pat. 550, which was decided by Das and James, JJ. it was held that a sale deed once registered passes title unless it is established to the satisfaction of the Court that the intention of the parties was that title should not pass until the payment of consideration.

    12. In the case in 1 cut. L.T 12 decided by Fazl All, J., as he then was sitting singly, his Lordship, referring to the recitals, said:

    “It is now settled law that Section 92 of the Evidence Act will not debar a party to a contract in writing from showing notwithstanding the recitals in the deed that the consideration specified in the deed was not in fact paid as therein recited but was agreed to be paid in a different manner”.

    13. In that case the sale deed which was for a consideration of Rs. 300 recited:

    “We have already taken Rs. 3-4-0 out of the consideration. We take the balance of the consideration Rs. 269-12-0 in cash hand to hand (nagaddust badust) from the vendee and execute this sale deed agreeing therein that from today the vendee will be malik in the said zamindary interest with nit-chas and nit-jote appertaining thereto.”

    14. The lower appellate Court, however, found as a fact that the sale deed was for consideration partly paid and partly promised. His Lordship, accepting this finding, and, relying on the recital in the sale deed that the vendee would be the malik of the zamindari interest from “today”, that is to say, from the date of the execution of the sale deed, held that the intention of, the vendor could not have been that the title to the property would not pass until the whole of the consideration money had been paid.

    15. In the case in 10 Pat. 264 which was decided by Fazl Ali J. as he then was, and A.N Chatterji J. it was held that

    “title passes to the vendee on the execution of the sale deed although the purchase money may remain wholly or partly unpaid except where there is an agreement that the sale should take effect only if the consideration is first paid.”

    16. In the case in 17 Pat. 318 which was decided by Courtney. Terrell, C.J and James J. their Lordships pointed out that there was actually no conflict between their earlier decision in 1 Cut. L.T 1, and the decision in 1 Cut. L.T 12. James J. who delivered the leading judgment, said:

    “Ordinarily the title to property transferred by sale passes on the registration of the sale deed although it may sometimes happen that the parties agree that title shall not pass until the consideration is completely paid.”

    17. His Lordship with reference to the facts of that case, said:

    “Apart from the conveyance itself, the subsequent conduct of the parties indicates that the intention was that title should pass on the registration of the document.”

    18. Courtney-Terrell, C.J in his judgment said

    “Statements of facts are different from the nature of the contract between the parties which must be determined from a reading of the document itself. If the document is ambiguous in character, then certainly reference can be made to evidence for the purpose of ascertaining what the intention of the parties was. If on the other hand the contract is unambiguous in its terms, then you cannot introduce evidence for the purpose of showing that the contract means something other than what it expresses in unambiguous terms”.

    19. Upon a consideration of these authorities, it seems clear that the question whether title under a sale deed passes upon its execution and registration or is postponed until payment of the entire consideration depends on the intention of the parties which must be gathered from the sale deed itself; but where the terms of the sale deed are not clear and decisive, the surrounding circumstances and conduct of the parties may be looked into.

    20. In the present case the plaintiff's sale-deed Ext. 3 recites:

    “I, the executant, of my own accord and free-will, absolutely sold and vended the property the full descriptions of which are given above, for a price of Rs. 1000 (One Thousand) to Babu Jagannath Saraogi the claimant, aforesaid, and put him in possession of the vended property from this day forward. The claimant aforesaid should enter upon and remain in possession thereof and use the same in any way he likes. To this I or my heirs and representatives shall have no objection. Whatever right and interest and connection and concern I the executant or my heirs and representatives had, have and would have got in respect of the vended property, aforesaid, have all passed on, by transfer, to the claimant from this day forward. Now I the executant or my heirs and representatives shall not, in future, be competent to lay any claim whatsoever on the vended property aforesaid or any part thereof and should we do so, the same shall be deemed null and void in face of this deed.”

    21. Then in the concluding portion there is also the following recital:

    “As per recitals made above, on receipt of Rs. 1000 (Rupees One Thousand) the entire consideration money covered by this deed, I have, of my own accord and free will executed this deed of absolute sale, so that it may be of use when required.”

    22. Mr. S.N Bose relied on this last recital and contended that the payment of the entire consideration and the passing of title were contemporaneous, as held in the case in 1 Cut. L.T 1. I am unable to accede to this contention. The earlier recital which I have quoted above is quite clear and definite, and it shows that the intention of the parties could not be that title to the property would not pass until the consideration money had been paid. But assuming that the later recital raises any ambiguity, the matter is made clear by the deed of agreement Ex. 1, executed on the same day. This document shows that on that day the vendor received Rs. 216 out of the consideration and made over the sale deed to the vendee and also undertook not to sell the property to anybody else. The sale deed would not have been made over to the vendee if the intention had been that title would not pass until payment of the entire consideration. The undertaking given not to sell the property to anybody else also indicates that the parties intended that the sale would to complete upon registration. It is true that the sale deed was handed back to the vendor to be presented for registration and that after registration it remained with him. But this does not necessarily prove that title did not pass upon execution and registration.

    23. Reliance was placed on behalf of the appellants on the notice Ext. 4 dated 13th January 1939 sent by Phulchand to the plaintiff asking the latter to pay the consideration money within two days and take the sale deed, failing which the sale-deed would be deemed cancelled. But to this notice the plaintiff sent a reply Ext. 5 dated 14th January 1939, stating that Rs. 274-8.0 out of the consideration had already been paid and that he was ready to pay the balance when possession of the property would be delivered to him. Both the Courts below considered these notices, and in their view they do not prove that the sale-deed was not intended to be operative until the balance of the consideration money was paid. I am unable to hold that their view is wrong.

    24. In my opinion the decision of the Courts below is correct. The appeal must be dismissed with costs.

    25. Leave to appeal under the Letters Patent is granted.

    Judgment in Letters Patent Bench.

    Fazl Ali, C.J:— The only point which arises in this appeal relates to the construction of a sale-deed executed by the husband of defendant No. 2 in favour of the plaintiff on 23rd December 1938. It appears that on the date of the execution of the deed only a part of the consideration money was paid. The deed was registered on the 6th January 1939 and after the exchange of some correspondence between the plaintiff and the husband of defendant No. 2 as to the payment of the balance of the consideration the latter executed another sale deed in favour of defendant No. 3 on 20th February 1939. After that the plaintiff brought a suit for a declaration of his title under the sale deed of 23rd December 1938, and for possession of the lands which were the subject of that deed. The suit was resisted by the defendants and they alleged that the intention of the parties was that the sale deed should come into operation only on the payment of the entire consideration money, and as the entire consideration money was not paid, the title did not pass to the plaintiffs.

    26. In the first two Courts one of the questions raised was as to what was the extent of the land sold in favour of the plaintiffs and the lower appellate Court ultimately held that this land was 1.16 acres and granted a decree to the plaintiffs in respect of that area. This decree has been upheld by the learned single Judge of this Court and hence this appeal under the Letters Patent.

    27. As I have already stated, the question which arises in this case can be determined only with reference to the sale deed executed in favour of the plaintiffs. The learned single Judge has held that upon the language of that deed the title passed to the plaintiff upon its execution. In my opinion that view is correct. It is stated in the sale deed among other things that

    “whatever interest the executant had, had passed by transfer to the claimant from this day forward and that he and his heirs shall not in future be competent to lay any claim whatsoever to the vended property or any part thereof and should they do so, the same shall be deemed to be null and void.”

    28. In my opinion these words clearly support the conclusion arrived at by the learned single Judge. Before him reliance was placed on behalf of the defendants upon another part of the document which contained the following recital:

    “As per recitals made above on receipt of Rs. 1000 the entire consideration money covered by this deed I have of my own accord and free will executed this deed of absolute sale, so that it may be of use when required.”

    29. It was contended that though there is a recital to the effect that the entire consideration had already been paid, yet in fact only a part of the consideration had been paid and therefore it should be inferred that the title was not intended to pass until the entire consideration was paid. This argument was negatived and the learned Judge pointed out that even if it was held that the deed was ambiguous, a certain agreement which was admittedly entered into between the parties would show that the title was intended to pass upon the execution of the sale deed. In my opinion the learned single Judge has taken the correct view in this case and I would dismiss this appeal with costs.

    Manohar Lall, J.:— I agree.

    K.S

    30. Appeal dismissed.

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    Pirtam Singh And Others v. Jagannath Sarawgi And Others
    (Dec 7, 1945)